Founder faces federal drug, hacking charges

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SAN FRANCISCO - Federal agents have arrested the founder of a mysterious online marketplace, months after the Call 6 Investigators found hard-core drugs being sold to a Fishers teenager on the site.

The Silk Road Anonymous Marketplace displayed a message on Wednesday, telling some 900,000 registered users that the site had been seized by federal agents in a sweeping worldwide narcotics crackdown.

In May, the Call 6 Investigators tracked two shipments of drugs, where police said a 14-year-old boy was able to buy drugs and have them shipped right to his family’s front door in regular mail deliveries.

His mother said the shipments were hidden in cartoon DVD cases, and Fishers police then confirmed it was illegal hard-core narcotics. The boy admitted that he had been buying drugs on the Silk Road marketplace, and police said that allowed them to intercept a second drug shipment that was also destined for the family’s home.

In court papers , federal agents wrote that they arranged more than 100 undercover drug purchases using the same methods as the Fishers teenager.

Unlike a typical web site, Silk Road used an anonymous technology known as Tor which allowed users to log on anonymously. Police told the Call 6 Investigators that teenagers and other web-savvy users knew exactly how to access the web portal, and agents said they tallied some $1.2 billion worth of transactions, using an anonymous online currency known as BitCoins .

Agents seized $3.6 million worth of the Bitcoin currency in their raid.

Ulbricht’s court-appointed public defender declined to comment when approached by a reporter at his San Francisco federal court hearing. He was scheduled to face a judge again on Friday for a detention hearing, to determine whether he is eligible for release from jail on bail.

The Fishers mother who caught her son’s drug shipments cried as she told the Call 6 Investigators in May, “My main concern was just to make sure I was doing everything I could to try to save his life. And I knew I couldn’t do it on my own.”

When the drugs fell out of her son’s DVD shipment, she immediately took her son and the shipment to police. The child was arrested on attempted drug possession charges.

“It’s not like there was someone knocking at my door, it’s not like he was out in the neighborhood, coming home acting differently. It was delivered straight to him in the mailbox,” said the mother, who spoke on the condition of anonymity.

Indiana State Police Cyber Crimes Lt. Chuck Cohen told the Call 6 Investigators that tracing the anonymous online sales was next to impossible, however he said that going after individual sellers on the site was getting more attention from law enforcement.

“We are doing these investigations and we will find you and we will arrest you and you will be prosecuted,” he said.

Police said the Silk Road web portal was known as the Ebay or the Amazon for anything illegal that someone may want to buy.

Lt. Cohen said his officers found a wide range of crimes being facilitated on the site, “ranging from child pornography to people that are selling weapons, instructions on how to build destructive devices and illegal drugs.”

As police nationwide said they were struggling to crack through the anonymous online transactions, Forbes reported in August that it was able to easily buy drugs on the site.

FBI and IRS agents now reveal they were buying drugs in an undercover capacity at the same time.

Agents said they had most of the drug shipments mailed to addresses in New York. Agents said the site was used by “several thousand drug dealers” to sell “hundreds of kilograms of illegal drugs.”